Companies unable to borrow, despite lower interest rates

Even after commercial banks capped the deposit interest rate at 14 percent and cut lending interest rates, companies continue to complain of their inability to borrow capital at 21-24 percent per year.

Many companies hope to access lower interest rates to grow production. (Photo:SGGP)

Major commercial banks have lowered the dong lending rates on loans to businesses at 17-19 percent. However, Bui Van Chinh, director of the Hoan Cau Garment Company, says he is being denied access to lower rates. A bank offered him lending interest rate at 21.5 percent per year.

Chinh said that it is difficult to access the lending rate at 17-19 percent. Some businesses have had to accept lending rate at 20-24 percent, despite offering mortgage assets.

Similarly, companies operating in sectors like mechanics, plastic and electronics also complained about the lending interest rate that banks were offering at 22-23 percent, sometimes even higher.

Tran Van Binh, director of Hoang Tan Private Company said that his firm had asked to borrow from some commercial banks but none agreed to lend at 19 percent. Now, he has to borrow at 22 percent.

Le Ba Lich, chairman of the Vietnam Association of Animal Feed Manufacturers, said only a few big firms could access the lower interest rates. Many small firms still borrowed at interest rates of over 19 percent.

A representative of Dai A Commercial Bank said that the bank just applied the lending rate of 17-19 percent for some special companies. The bank carefully assessed firms’ profiles before deciding to lend them, to ensure that we offer the loans to the right people, the representative said.

In the short term, the rates will be applicable only to particular beneficiaries or loyal customers of the bank, the representative said.

Another manager of a commercial bank who wished to remain anonymous said the reduced lending interest rates could cause problems for banks.

It is difficult for banks to lower lending rates suddenly and apply the new rates for all customers, he said.

The interest rates of 17-19 percent can only be applied to more and more customers in the next one or two months when banks have dealt with all high-interest deposits, he said. If banks disrupt the cap on deposit rates, lending rates will be cut as low as 17 percent in coming times.

By Lac Phong – Translated by T.Huong

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